SIGAR. Afghan National Army: Millions of Dollars at Risk Due to Minimal Oversight of Personnel and Payroll Data A P R I L

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1 SIGAR Special Inspector General for Afghanistan Reconstruction SIGAR Audit Report Afghan National Army: Millions of Dollars at Risk Due to Minimal Oversight of Personnel and Payroll Data A P R I L 2015 SIGAR AR/Afghan National Army Personnel and Payroll Data

2 SIGAR Special Inspector General for Afghanistan Reconstruction WHAT SIGAR REVIEWED Since 2009, the U.S. government has provided more than $2.3 billion to pay the salaries and incentives of the Afghan National Army (ANA), which includes the Afghan Air Force. In January 2015, Essential Function 4, a component of the new North Atlantic Treaty Organization (NATO) Resolute Support mission, reported 169,203 personnel assigned to the ANA, filling 87 percent of the force s 195,000 authorized positions as of September 30, The Afghan Ministry of Defense (MOD) and the ANA collect personnel and payroll data, while Essential Function 4 previously the Combined Security Transition Command Afghanistan (CSTC-A) is required to support the MOD in maintaining transparent processes to collect and verify this data, and CSTC-A continues to be responsible for overseeing U.S. direct assistance provided to the MOD to fund ANA salaries. Accurate ANA personnel and payroll data is essential to ensure the security and stability of the country. The objectives of this audit were to assess (1) the processes by which CSTC-A, Essential Function 4, and the Afghan government collect personnel and payroll data for ANA personnel assigned and present-for-duty; (2) how CSTC-A, Essential Function 4, and the Afghan government store, access, transfer, and use this data; and (3) the extent to which CSTC-A, Essential Function 4, and the Afghan government verify and reconcile ANA personnel and payroll data in order to determine the accuracy of the data. April 2015 Afghan National Army: Millions of Dollars at Risk Due to Minimal Oversight of Personnel and Payroll Data SIGAR AUDIT REPORT WHAT SIGAR FOUND Despite 13 years and billions of dollars in salary assistance to the Afghan government for the ANA, there is still no assurance that personnel and payroll data are accurate. Although the U.S. and Afghan governments have been working to develop effective ANA personnel and payroll processes, those processes continue to exhibit extensive internal control deficiencies. SIGAR found that Essential Function 4 (and prior to January 2015, CSTC-A), relies on the MOD and ANA to collect and accurately report ANA personnel and payroll data. However, the ANA s process for collecting unit-level attendance data, upon which all ANA personnel and payroll data is based, has limited oversight and weak controls, and is not consistently applied across ANA locations. There are no requirements that supervisory ANA officials observe attendance data collection at lower level units. CSTC-A officials are not present during the attendance process, and command officials told SIGAR that they have limited knowledge of and influence over the process. The only control in place at the unit level to ensure accurate ANA attendance reporting on a day-to-day basis a roster individual ANA personnel sign daily was not consistently used across ANA locations. For example, officers used the roster, but enlisted personnel did not. This lack of control over enlisted personnel attendance provides minimal assurance that unit commanders are accurately reporting personnel attendance. These weaknesses in the ANA attendance data collection process could result in personnel being paid for days not worked, either with or without knowledge of supervisory personnel. CSTC-A, Essential Function 4, and the MOD use both manual processes and electronic systems to store, access, transfer, and use ANA personnel and payroll WHAT SIGAR RECOMMENDS SIGAR recommends that the Commander, U.S. Forces Afghanistan (USFOR-A) in coordination with the NATO Resolute Support mission and the MOD, as appropriate (1) implement additional controls on the daily, unit-level attendance process, such as mandating that all ANA SIGAR staff collects data from ANA personnel in Herat province. Source: SIGAR site visit, April 19, 2014 For more information, contact SIGAR Public Affairs at (703) or sigar.pentagon.ccr.mbx.public-affairs@mail.mil.

3 data. However, weaknesses within these processes and systems provide limited assurance that ANA personnel receive accurate salaries. SIGAR found that the Afghanistan Human Resource Information Management System the ANA s human resources system that CSTC-A has been implementing since 2010 lacks certain electronic data system functions and controls, such as the ability to differentiate between active and inactive personnel, and track ANA personnel by position and identification number. In addition, MOD does not have an electronic payroll data system for determining ANA salaries, but instead calculates salaries by hand. Further, the Afghan government s financial management system, the Afghan Financial Management Information System, only contains aggregated ANA salary expenditures, not individual salary payments. SIGAR found that the MOD, CSTC-A, and Essential Function 4 lack documented procedures for determining the accuracy of ANA personnel and payroll data. The MOD s ANA Attendance and Reporting Policy lacks specific procedures for confirming personnel and payroll data; MOD officials confirmed that the MOD s ANA data verification processes are informal, and conducted without written standards or procedures. Similarly, SIGAR found Essential Function 4 and CSTC-A had no direct oversight of ANA personnel data and took few actions to verify the accuracy of personnel figures reported by the MOD. The verification efforts CSTC-A reported undertaking were ad-hoc, and often based on specific officials undocumented familiarity with the data and the MOD s reporting. Further, CSTC-A has minimal oversight of U.S. direct assistance funding for ANA salaries, making it difficult for the command to ensure that the funds are being used to pay authorized ANA personnel their correct salaries. Despite CSTC-A s own requirements to ensure ministries receiving direct contributions including the MOD maintain adequate fiscal controls and auditable records, SIGAR found that the command has not been receiving required submissions of MOD financial records and conducted only two audits of MOD operations since January These audits uncovered personnel being paid without serving in authorized ANA positions and lacking conclusive identification. As U.S. and coalition forces continue to draw down, the U.S. government will have increasingly limited visibility over ANA data collection processes. As a result, the U.S. government will become even more reliant on the MOD s ability to verify the accuracy of the ANA personnel and payroll data it collects. Unless the MOD develops the capability to ensure and verify the accuracy of this data, there is a significant risk that U.S. funding for ANA salaries will be wasted or abused. A SIGAR official collects personnel data from an ANA unit. Source: SIGAR site visit, April 19, 2014 personnel sign in and out daily, requiring the use of identification numbers in the attendance process, and having oversight personnel present to observe and verify this process by December 2015; (2) ensure that, by April 2017, the MOD is using a fully operational electronic system(s) to track and report all ANA personnel and payroll data at the corps level and above, calculate ANA salaries, and ensure that these systems have controls in place to prevent internal errors, external inconsistencies, and manipulation; (3) develop and implement, by July 31, 2015, a verification plan that details procedures by which the MOD will verify ANA personnel and payroll data; and (4) develop written procedures to document required steps for verifying ANA data, by July 1, 2015, that include risk-based procedures for conducting physical verification activities at ANA locations, and procedures for reconciling all available ANA data after each disbursement, including attendance, personnel, and payment data, and salary payment confirmations. SIGAR received comments from the Office of the Under Secretary of Defense for Policy and CSTC-A, through USFOR-A. The Office of the Under Secretary of Defense for Policy stated that developing and implementing an integrated personnel and pay system is a key focus area. Furthermore, the office stated that it plans to work closely with CSTC-A to provide support toward achieving a level of accountability that will contribute to the security of Afghanistan and the protection of U.S. taxpayers. CSTC-A partially concurred with the first three recommendations and concurred with the fourth; it described actions it will take, in coordination with the MOD, to implement them. SIGAR will continue to monitor these actions to ensure that the command fully implements the recommendations. For more information, contact SIGAR Public Affairs at (703) or sigar.pentagon.ccr.mbx.public-affairs@mail.mil.

4 April 23, 2015 The Honorable Ashton B. Carter Secretary of Defense General Lloyd J. Austin III Commander, U.S. Central Command General John F. Campbell Commander, U.S. Forces Afghanistan and Commander, Resolute Support This report discusses the results of SIGAR s audit of the processes for collecting and verifying the accuracy of Afghan National Army (ANA) personnel and payroll data, which are relied upon by the Combined Security Transition Command Afghanistan (CSTC-A), the North Atlantic Treaty Organization (NATO) Resolute Support mission Essential Function 4, and the Afghan government. The report includes four recommendations. We recommend that the Commander, U.S. Forces Afghanistan (USFOR-A), in coordination with the NATO Resolute Support mission and the Afghan Ministry of Defense (MOD) as appropriate: (1) implement additional controls on the daily, unit-level attendance process, such as mandating that all ANA personnel sign in and out daily, requiring the use of identification numbers in the attendance process, and having oversight personnel present to observe and verify the this process by December 2015; (2) ensure that, by April 2017, the MOD is using a fully operational electronic system(s) to track and report all ANA personnel and payroll data at the corps level and above, calculate ANA salaries, and ensure that these systems have controls in place to prevent internal errors, external inconsistencies, and manipulation; and (3) develop and implement, by July 31, 2015, a verification plan that details procedures by which the MOD will verify ANA personnel and payroll data. We also recommend that the Commander, USFOR-A, in coordination with the NATO Resolute Support mission, develop written procedures to document required steps for verifying ANA data by July 1, This documentation should include risk-based procedures for conducting physical verification activities at ANA locations, and procedures for reconciling all available ANA data after each disbursement, including attendance, personnel, and payment data, and salary payment confirmations. We received written comments on a draft of this report from the Office of the Under Secretary of Defense for Policy and CSTC-A, through USFOR-A, which we incorporated, as appropriate. The Office of the Under Secretary of Defense for Policy stated that developing and implementing an integrated personnel and pay system is a key focus area. Furthermore, the office stated that it plans to work closely with CSTC-A to provide support toward achieving a level of accountability that will contribute to the security of Afghanistan and the protection of U.S. taxpayers. USFOR-A concurred with one recommendation and partially concurred with three recommendations. These comments are presented in appendices II and III, respectively. SIGAR conducted this work under the authority of Public Law No , as amended, and the Inspector General Act of 1978, as amended; and in accordance with generally accepted government auditing standards. John F. Sopko Special Inspector General for Afghanistan Reconstruction

5 TABLE OF CONTENTS Background... 2 ANA Attendance Data Is Minimally Controlled, Inconsistently Collected, and Lacking Direct Oversight... 6 Weaknesses within ANA Data and Payment Systems Provide Limited Assurance that Personnel Receive Accurate Salaries... 7 The MOD, CSTC-A, and Essential Function 4 Lack Documented Procedures for Determining the Accuracy of ANA Personnel and Payroll Data, and CSTC-A Has Limited Oversight of Direct Assistance Funding for ANA Salaries 11 Conclusion Recommendations Agency Comments Appendix I - Scope and Methodology Appendix II - Comments from the Office of the Under Secretary of Defense for Policy Appendix III - Comments from U.S. Forces Afghanistan Appendix IV - Acknowledgments TABLE Table 1 - Data Systems Used to Store and Access ANP Personnel and Payroll Data... 7 FIGURE Figure 1 - ANA Personnel and Payroll Data: Key Players, Systems, and Data Flow... 4 SIGAR AR/Afghan National Army Personnel and Payroll Data Page iv

6 ABBREVIATIONS 2015 NDAA National Defense Authorization Act for Fiscal Year 2015 AAF AFMIS AHRIMS ANA CSTC-A DOD DODIG GAO MOD MOF NATO USFOR-A Afghan Air Force Afghan Financial Management Information System Afghanistan Human Resource Information Management System Afghan National Army Combined Security Transition Command Afghanistan Department of Defense Department of Defense (Office of Inspector General) U.S. Government Accountability Office Afghan Ministry of Defense Afghan Ministry of Finance North Atlantic Treaty Organization U.S. Forces Afghanistan SIGAR AR/Afghan National Army Personnel and Payroll Data Page v

7 As of December 2014, the U.S. government has provided $2.3 billion through the Afghanistan Security Forces Fund to pay Afghan National Army (ANA) salaries and incentives since According to the Department of Defense (DOD), the ANA, which includes the Afghan Air Force (AAF), reached a maximum strength of 195,000 authorized personnel during ,3 In January 2015, Essential Function 4 of the North Atlantic Treaty Organization (NATO) Resolute Support mission, the entity newly responsible for reporting ANA personnel figures, reported 169,203 personnel assigned to the ANA as of the previous quarter, ending September 30, During Afghan fiscal year 1393 which began on December 21, 2013, and ended on December 20, 2014 the Combined Security Transition Command Afghanistan (CSTC-A) provided the Ministry of Defense (MOD), which oversees the ANA, with a total of $1.7 billion dollars to help build and sustain the ANA. 5 For Afghan fiscal year 1394 December 21, 2014 through December 20, 2015 CSTC-A is slated to provide $1.6 billion to the MOD for the ANA. The Afghan government and ANA commanders require personnel data to effectively develop Army and Air Force personnel plans and identify personnel shortages. They require accurate payroll data to request sufficient salary funding and ensure personnel receive full and correct salary payments. The United States has used personnel and payroll data to verify ANA funding requests and to guide transition strategy as the Afghan National Security Forces assumed full control over security in Afghanistan at the end of 2014 and its continuing support for the ANA. Accurate and reliable accounting of ANA personnel is necessary to ensure accountability over U.S. funds supporting the ANA and keep policy-makers and other stakeholders informed. In a June 2008 report, the U.S. Government Accountability Office (GAO) warned of personnel accountability problems within the ANA. GAO cited DOD officials statements that numbers on ANA personnel present-for-duty may differ from trained and assigned personnel numbers because of attrition, absenteeism, and casualties, and that roughly 20 percent of ANA combat personnel were not present for duty as of February These DOD officials also noted that ANA troops who are killed may remain on the payroll in order for their families to receive compensation in lieu of an official death benefit. Since 2008, GAO, SIGAR, and the DOD Inspector General (DODIG) have all identified numerous weaknesses in fundamental ANA personnel data, including limited U.S. and Afghan oversight of data collection processes, little or no physical verification of ANA personnel existence and daily attendance, and lack of controls over the ANA payroll process. 7 Furthermore, in February 1 According to U.S. military officials, there is no data on salary funding provided by the U.S. government prior to Unless specifically noted, all references in this report to the ANA include the AAF. Civilian members of the ANA and AAF were not included in our review. 3 DOD, Justification for FY 2015 Overseas Contingency Operations (OCO) Afghanistan Security Forces Fund (ASFF), June Essential Function 4 assumed responsibilities for reporting on Afghan National Security Forces personnel on November 1, 2014, when the essential function structure was phased into operation in preparation for the NATO s transition from the International Security Assistance Force to the Resolute Support Mission. Additional details on ANA personnel numbers, including the break out between the ANA and AAF, are classified. 5 CSTC-A, a subordinate command of U.S. Forces Afghanistan, is responsible for implementation of the U.S. advisory and assistance mission. On November 1, 2014, it was reorganized under the NATO s Resolute Support Mission. Under this new mission, CSTC-A s responsibilities for overseeing ANA personnel and payroll data were transferred to Essential Function 4 as a part of the latter s responsibilities to recruit, train, and equip the Afghan National Security Forces. CSTC-A initially disburses direct assistance funding for the MOD to the Afghan Ministry of Finance, which then disburses funds to the MOD. 6 GAO, Afghanistan Security: Further Congressional Action May Be Needed to Ensure Completion of A Detailed Plan to Develop and Sustain Capable Afghan National Security Forces, GAO , June 18, For example, see: GAO, Afghanistan Security: Further Congressional Action May Be Needed to Ensure Completion of A Detailed Plan to Develop and Sustain Capable Afghan National Security Forces, GAO , June 18, 2008; SIGAR Audit 10-11, Actions Needed to Improve the Reliability of Afghan Security Force Assessments, June 29, 2010; GAO, Afghanistan: Actions Needed to Improve Accountability of U.S. Assistance to Afghanistan Government, GAO , July 20, 2011; DODIG, Distribution of Funds and Mentoring of Finance Officers for the Afghanistan National Army Payroll Need Improvement, DODIG , February 29, 2012; DODIG, Assessment of U.S. Efforts to Develop the Afghan National Security Forces Command, Control and Coordination System, DODIG , March 22, 2013; DODIG, Assessment of U.S. and Coalition Efforts to Develop Leaders in the Afghan National Army, DODIG , June 24, 2013; and DODIG, SIGAR AR/Afghan National Army Personnel and Payroll Data Page 1

8 2015, we learned that the Afghan National Security Forces personnel numbers DOD reported between April and October 2014 were incorrect due to a DOD accounting error. 8 The objectives of this audit were to assess (1) the processes by which CSTC-A, Essential Function 4, and the Afghan government collect personnel and payroll data for ANA personnel assigned and present-for-duty; (2) how CSTC-A, Essential Function 4, and the Afghan government store, access, transfer, and use this data; and (3) the extent to which CSTC-A, Essential Function 4, and the Afghan government verify and reconcile ANA personnel and payroll data in order to determine the accuracy of the data. 9 During this audit, we reviewed CSTC-A data verification requirements, plans, procedures, and reports, including CSTC-A audits, and ANA and MOD standard operating procedures for data collection and oversight. We visited the 207th Corps headquarters in Herat province, the 209th Corps headquarters in Balkh province, and the AAF Air Wing in Kabul, where we interviewed ANA officials, obtained ANA attendance documentation, and recorded personnel information for verification and reconciliation purposes. We obtained data from the Afghanistan Human Resources Information Management System (AHRIMS). We also reviewed prior audit reports from GAO and DODIG. In addition, we interviewed CSTC-A, MOD, ANA, and International Security Assistance Force officials familiar with ANA attendance procedures, relevant data systems, and the payroll process. We conducted our work in Kabul, Herat, and Balkh provinces in Afghanistan, and Washington, D.C., from February 2013 through April 2015 in accordance with generally accepted government auditing standards. Appendix I contains a more detailed discussion of our scope and methodology. BACKGROUND The Afghan transitional government established the ANA in 2002, as called for by the 2001 Bonn Agreement. The ANA is organized under the MOD and consists of six regional corps, headquartered in Kabul, Balkh, Kandahar, Herat, Paktia, and Helmand provinces, and one capital division, located in Kabul. The AAF, considered a branch of the ANA, consists of three air wings located in Kabul, Kandahar, and Herat provinces, and three air detachments located in Balkh, Herat, and Nangarhar provinces. The U.S. and Afghan governments require the collection of ANA personnel and payroll data to support the MOD and ANA. Such data is necessary for the ANA to function as a security force, maintain accountability, and accurately pay salaries. This data includes name, rank, identification information, and duty location which identify personnel as well as daily attendance figures, base salary, and applicable financial incentives which determine how much each individual will be paid. Essential Function 4, CSTC-A, and the Afghan government have requirements for collecting, updating, and verifying ANA personnel and payroll data as follows: Essential Function 4 has been given primary responsibility within Resolute Support for assisting the Afghan government with the creation of Afghan National Security Forces personnel accountability systems, a role it inherited from CSTC-A. The National Defense Authorization Act for Fiscal Year 2015 (2015 NDAA) requires the Secretary of Defense to submit to Congress a report that contains, plans for improving [Afghan National Security Forces] ANSF oversight mechanisms, including an effective record-keeping system to track ANSF equipment and personnel and a sustainable process to identify, investigate, and eliminate corruption. 10 The 2015 NDAA also requires the Secretary of Defense to Government of the Islamic Republic of Afghanistan Needs to Provide Better Accountability and Transparency Over Direct Contributions, DODIG , August 29, SIGAR, Supplement to SIGAR s January 2015 Quarterly Report to the United States Congress, March 3, In January 2015, we issued a similar report on our audit of Afghan National Police personnel and payroll data (see SIGAR Audit AR, Afghan National Police: More than $300 Million in Annual, U.S.-funded Salary Payments Is Based on Partially Verified or Reconciled Data, January 7, 2015). 10 Carl Levin and Howard P. Buck McKeon National Defense Authorization Act for Fiscal Year 2015, Pub. L. No , 1224 (2014). See also National Defense Authorization Act for Fiscal Year 2008, Pub. L. No , 1231, as amended, which required the Secretary of Defense to report similar information to Congress between fiscal years 2008 and SIGAR AR/Afghan National Army Personnel and Payroll Data Page 2

9 report semiannually to Congress on building and sustaining the Afghan National Security Forces and enhancing security and stability in Afghanistan. 11 Essential Function 4 is responsible for fulfilling the reporting requirements contained in the 2015 NDAA; between fiscal years 2008 and 2014, CSTC-A was responsible for these reporting activities. 12 CSTC-A, a subordinate command of U.S. Forces Afghanistan that works closely with Resolute Support, continues to be responsible for overseeing U.S. direct assistance to the MOD, including funding provided for ANA salaries and other monetary benefits. According to CSTC-A s Direct Contributions Standard Operating Procedures, the command is responsible for ensuring that the MOD establishes appropriate standard operating procedures and maintains adequate fiscal controls and auditable records of all disbursements, including supporting documentation. 13 In addition, the direct contributions standard operating procedure requires CSTC-A s Financial Management Oversight office to account for and oversee all direct assistance funding using measures, such as payroll and contract compliance audits, and reviews of payroll expenditure reports, payroll summaries from the MOD and the Afghan Ministry of Finance (MOF), electronic financial transaction reports, and other payroll data. The office is also responsible for establishing and implementing a formal internal control program for direct assistance. The Afghan government is responsible for collecting ANA attendance data in daily and monthly status reports as required by the MOD s Policy, Regulation of ANA Personnel Accounting and Strength Reporting issued in August Additional requirements for the MOD s monthly reporting are included in the ANA Readiness Reporting System Regulations of September These include requirements that the ANA Chief of Operations establish a methodology for analyzing readiness data and check the data for accuracy. ANA Personnel and Payroll Data Collection Processes According to documents provided by CSTC-A and the Afghan government, as well as interviews with CSTC-A and Afghan government personnel, which we verified through site visits to ANA locations, ANA personnel and payroll data is intended to be collected and transferred using processes illustrated in figure Pub. L. No , This section repealed and superseded section 1230 of the National Defense for Fiscal Year 2008, Pub. L. No , as amended, which required the Secretary of Defense to report to Congress on the progress made towards security and stability in Afghanistan. 12 See Pub. L. No , , as amended. 13 CSTC-A Financial Management Oversight Office, Afghanistan Security Forces Funds Direct Contributions Standard Operating Procedures, October 30, According to CSTC-A officials, a revised policy is expected to be released later in SIGAR AR/Afghan National Army Personnel and Payroll Data Page 3

10 Figure 1 - ANA Personnel and Payroll Data: Key Players, Systems, and Data Flow Source: SIGAR analysis of CSTC-A and MOD documents Note: EF-4 abbreviates Essential Function 4. The MOD requires the ANA to record personnel attendance present- and not present-for-duty on a daily basis. According to CSTC-A officials, ANA unit-level commanders base their daily attendance reports on check-in and check-out signatures from each individual under their command. Officials at lower-level ANA units pass attendance data to their corps headquarters by hand or on a monthly basis. This attendance data serves two purposes: (1) personnel totals, ranks, skills, and locations are used to facilitate planning and reporting for human resources needs, and (2) personnel salary levels, incentive and deduction amounts, and attendance data are used to calculate salary payments. Corps headquarters officials also report personnel totals to the MOD. The MOD reports these totals by corps to Essential Function 4 previously CSTC-A on a monthly basis, which uses them to develop its required submission for the DOD s semiannual Report on Progress Toward Security and Stability in Afghanistan. Once ANA personnel and payroll data is collected, it is entered into a series of data systems using manual entry and transfer processes. ANA Recruitment Center and Kabul Military Training Center officials collect new recruit data and create a personnel record for each recruit in AHRIMS, a system developed under a CSTC-A-contract that the ANA and Afghan National Police use to store human resources information. 15 Human resource officials at the ANA corps headquarters are responsible for updating AHRIMS records to reflect changes in status, including rank, duty location, and training. 15 During our audit work, corps headquarters officials were in the process of scanning hard copy ANA personnel records into AHRIMS. As of October 2014, corps officials had scanned approximately 180,000 personnel records into AHRIMS, and about 12,000 personnel records remained to be entered into the system. SIGAR AR/Afghan National Army Personnel and Payroll Data Page 4

11 According to CSTC-A, battalion-level ANA officials summarize each individual s monthly attendance and applicable incentives into a spreadsheet that they send to corps headquarters by hand or . Corps headquarters officials manually calculate personnel salaries, deducting for absences, and create salary payment requests for personnel. These officials then pass the salary payment requests, along with payment summaries and bank transfer forms, to provincial-level representatives of the MOF. This MOF staff subsequently enters payroll data into the Afghanistan Financial Management Information System (AFMIS), the Afghan government s accounting system, determines the total salary amount to be sent to each ANA location, and disburses funds monthly to one of four banks. 16 The banks then electronically transfer salaries directly to individual bank accounts. Prior Reporting on ANA Personnel and Payroll Data Processes and Systems Since 2008, U.S. government oversight agencies have reported on issues with tracking and reporting ANA personnel and payroll data. For example: In 2008, GAO reported that high rates of absenteeism and attrition within the ANA are a challenge to tracking personnel data. 17 We echoed this finding in a 2010 report, noting that the effect of substantial absent without leave rates has been significant and has contributed to an overstatement of the ANA s capabilities. 18 In February 2012, the DODIG found a lack of visibility into ANA data at the local levels, reporting that CSTC-A finance officials only visited and audited payroll data for each of the six corps twice a year and rarely performed site visits below the corps level. 19 The DODIG also reported that ANA brigade-level personnel identified by CSTC-A s Finance Management Oversight office had altered deposit reports to shift money into colluders' accounts, and noted difficulties CSTC-A finance officials faced in obtaining bank records in order to verify salary payments. In a March 2013 report, the DODIG voiced concerns with the implementation and future sustainability of the MOD s information technology systems, and in June of that same year reported that the ANA could not maintain accurate personnel records. 20 An August 2014 DODIG report highlighted the Afghan government s lack of accountability and transparency over Afghanistan Security Forces Fund direct assistance payments. 21 The MOF reportedly could not confirm its cash balance of CSTC-A contributions. Further, the report noted that the MOD and Ministry of Interior did not have adequate controls in place to ensure that they used CSTC-A contributions as intended or paid ANSF salaries appropriately. DODIG stated that these conditions in the Afghan government existed because CSTC-A has not held the Afghan government financially accountable for failures to implement controls and properly handle direct contribution funds. Most recently, the February 2015 supplement to our January 2015 quarterly report reported that between April and October 2014, the International Security Assistance Force, predecessor to the Resolute Support mission, provided incorrect Afghan National Security Forces personnel numbers for our recent quarterly reports. According to the commander of the Resolute Support mission, the 16 MOF disburses funding for ANA salaries to four banks authorized to handle Afghan government payrolls. These banks are the New Kabul Bank and three commercial banks Azizi Bank, the Afghan United Bank, and Maiwand Bank. 17 GAO SIGAR Audit 10-11, Actions Needed to Improve the Reliability of Afghan Security Force Assessments. 19 DODIG DODIG and DODIG DODIG SIGAR AR/Afghan National Army Personnel and Payroll Data Page 5

12 numbers were incorrect due to an accounting error identified in September However, the military failed to notify us of the error or provide updated numbers until February To address these findings, DODIG and SIGAR recommended multiple changes to the U.S. government s efforts to improve ANA personnel and payroll data collection processes, including recommendations that DOD: 23 Work with CSTC-A to provide additional training and guidance to embedded NATO advisors regarding MOD procedures; 24 Work with the MOD, the MOF, and Kabul Bank to obtain payroll reports and verify payments made to ANA personnel; and 25 Implement data checks within AFMIS to disallow direct contributions from being used on unauthorized budget codes. 26 Although DOD concurred with these recommendations, and CSTC-A noted that the command has taken measures to address the problems identified, many recommendations still have not been fully implemented and the problems they were designed to address still persist, as we discuss later in this report. ANA ATTENDANCE DATA IS MINIMALLY CONTROLLED, INCONSISTENTLY COLLECTED, AND LACKING DIRECT OVERSIGHT We identified inconsistencies with the collection of ANA present-for-duty attendance data as well as a lack of higher level ANA, MOD, and coalition oversight of the data collection process. CSTC-A requires ANA personnel and payroll data to support the ANA effectively and ensure accountability over ANA funding. However, neither CSTC-A nor Essential Function 4 directly collects this data. Instead, they rely on the ANA to collect its own data, with oversight from the MOD. During visits to two corps headquarters, and interviews with both CSTC-A and ANA officials, we identified no examples of direct oversight either consistent or ad-hoc during attendance data collection and reporting. A CSTC-A advisor to the ANA reported that senior ANA officials who could provide direct oversight are not generally co-located with the unit-level officer responsible for collecting data, and during our site visits, we found no evidence that daily attendance procedures are supervised beyond the unit-level commander. In addition, CSTC-A officials are not present during the collection of ANA attendance data and reported limited knowledge of and influence over the attendance data collection process. CSTC-A officials stated that the command lacks sufficient staff to be present during ANA attendance data collection, and therefore must rely on ANA officials to collect and report accurate information. In lieu of direct oversight, we found that the only control in place at the unit level to ensure accurate ANA attendance reporting on a day-to-day basis a roster individual ANA personnel sign daily was not consistently used across ANA locations. The Balkh ANA and Kabul AAF units we visited showed us their signed attendance roster books; however, during our visit to an ANA unit in Herat, we observed that the unit was not using the roster as intended. The attendance roster Herat ANA officials showed us did not include signatures of individual ANA personnel assigned to the unit; instead, check marks appeared to have been recorded by a single individual SIGAR, Supplement to SIGAR s January 2015 Quarterly Report to the United States Congress, March 3, In lieu of recommendations directly to DOD, GAO s reports resulted in matters for congressional consideration to address the problems it identified. 24 SIGAR Audit 10-11, Actions Needed to Improve the Reliability of Afghan Security Force Assessments. 25 DODIG DODIG CSTC-A noted that check marks may be necessary in lieu of signatures when ANA personnel lack basic literacy skills. SIGAR AR/Afghan National Army Personnel and Payroll Data Page 6

13 In locations where the attendance rosters are being used as intended, CSTC-A and MOD officials stated they do not observe the signing of these rosters, review all rosters for verification purposes, or reconcile them against other personnel or payroll data. As a result, neither the rosters nor the checklists provide assurance that unit commanders are accurately reporting subordinate personnel attendance. This makes it possible for employees not performing assigned duties during the work day to go unnoticed or not reported as absent, which could result in personnel being paid for days not worked, either with or without knowledge from supervisory personnel. WEAKNESSES WITHIN ANA DATA AND PAYMENT SYSTEMS PROVIDE LIMITED ASSURANCE THAT PERSONNEL RECEIVE ACCURATE SALARIES CSTC-A, Essential Function 4, the MOD, and the ANA use both manual processes and electronic data systems to store, access, transfer, and use ANA personnel and payroll data. We identified problems with these systems, including inconsistent use, incomplete or incorrect data, lack of system integration, and weak internal controls. Table 1 lists these data systems the ANA uses and describes the weaknesses we identified with each system. Table 1 - Data Systems Used to Store and Access ANP Personnel and Payroll Data Data System Administrator Uses Identified Weaknesses ANA Identification System Resolute Support (under a contract with Netlinks) Contains a list of the unique ANA-issued identification numbers for each member of the force Lack of regular use of ANA-issued identification cards within the force AHRIMS MOD (under a CSTC-A-funded contract and managed by Resolute Support) Storage system for data on personnel education level, training, equipment, medical status, danger pay level, and other information Not fully functional at all corps headquarters Contains many incomplete records and data fields that need to be re-entered or verified Unable to differentiate between active and inactive personnel ANA Payroll System MOD Series of forms for calculating and reporting ANA personnel salaries AFMIS MOF Contains Afghan government expenditure data across all ministries Source: SIGAR analysis of CSTC-A and MOD documents Consists of 160,000 pages of handwritten payroll records Not linked with other systems All data manually entered, processed, and transferred, which can be slow and untimely Limited U.S. visibility into the system Not linked with other systems All data manually entered Limited number of line items makes oversight of detailed expenditures and tracking of funding throughout the payroll process difficult SIGAR AR/Afghan National Army Personnel and Payroll Data Page 7

14 AHRIMS Cannot Distinguish between Active and Inactive Personnel or Track Personnel by Their Position or Identification Number The usefulness of AHRIMS, the ANA s human resource data system, is limited. Specifically, we found that AHRIMS lacks certain electronic data system functions and controls, such as the ability to differentiate between active and inactive personnel, and track ANA personnel by their position and identification number. CSTC-A began developing AHRIMS in According to CSTC-A officials, it serves as an electronic filing system and lacks the capability of producing reports. According to CSTC-A, AHRIMS still cannot distinguish between active and inactive personnel. In a February 2013 audit report, CSTC-A noted that AHRIMS lacks the ability to identify inactive personnel and does not contain information on individuals unit assignments. 28 CSTC- A also found that 85 percent of sampled records lacked accurate rank data. 29 According to CSTC-A officials, matching individuals to authorized positions is the only way for AHRIMS to distinguish between active and inactive personnel, a capability they described as necessary for an effective human resources system. Officials told us they were in the process of matching each active ANA record with the authorized positions that the individual was filling. However, this process was not yet complete at the time we drafted this report. Without this capability, CSTC-A cannot determine what percentage of active ANA personnel has records in AHRIMS. Because neither CSTC-A nor the MOD can use AHRIMS to generate reports identifying all active ANA personnel, the MOD uses a separate and fully manual process to compile ANA personnel totals from daily attendance records for its monthly submission to CSTC-A. These manually generated totals are not reconciled against information contained in AHRIMS. As a result, there is no assurance that reported personnel totals are consistent with other available data. CSTC-A officials noted that AHRIMS should become capable of generating attendance reports after all personnel are listed within the system by ANA position, which they estimate will occur by July CSTC-A s commitment letter with the MOD for Afghan fiscal year 1394 December 21, 2014 through December 20, 2015 addresses this effort by requiring that all assigned personnel be matched to authorized positions no later than June 1, In the letter, CSTC-A reserves the right to assess an unspecified penalty against the MOD if insufficient progress is made in this effort. As of February 15, 2015, CSTC-A reported 74 percent of personnel had been matched to a position, and anticipated the remainder to be completed by July 1, 2015, a month later than required by the commitment letter. We found also that ANA-issued identification numbers are not consistently or effectively used for identification at ANA locations, to track attendance, to pay salaries, or to access electronic personnel records in AHRIMS. According to CSTC-A, during initial training, the MOD issues all recruits ANA identification cards with unique identification numbers. These cards are intended to be used for in-person physical identification purposes, and the identification numbers are supposed to allow personnel records to be tracked across systems, such as AHRIMs, and throughout the ANA payroll process. However, by not consistently using the identification cards and numbers, the MOD s and the ANA s ability to verify and track personnel is limited. The MOD Calculates All Salaries Manually Instead of Using an Electronic System Despite previous U.S. government efforts to implement an electronic payroll system for the ANA, as of January 2015, no such system was in place, and the MOD still calculated ANA salary payments using an entirely manual process. CSTC-A s December 2012 Afghan Ministry of Defense and Afghan National Army General Staff Master Development Plan states that automating processes may not always be the best solution, highlighting concerns with low ANA literacy rates and the expenses associated with electronic systems. That same year, the ANA s Computerized Payroll System, intended to be implemented by October 2012 as a way to 28 CSTC-A, Pay Audit of the Afghan National Army, General Staff (MoD ), February 26, According to CSTC-A, some of these issues will be addressed by the newest version of AHRIMS, version 1.2. SIGAR AR/Afghan National Army Personnel and Payroll Data Page 8

15 automate the payroll process, was eliminated. 30 More recently, however, CSTC-A officials stated that many of the current risks inherent in the ANA s personnel and payroll data collection process could be mitigated or resolved by using electronic personnel and payroll systems. Further, CSTC-A s commitment letter with the MOD for Afghan fiscal year 1393 December 21, 2013 through December 20, 2014 required the ministry to implement and use an electronic system for ANA payroll. In its commitment letter for Afghan fiscal year 1394 December 21, 2014 through December 20, 2015 CSTC-A reiterates the requirement for the MOD to implement an electronic pay system. CSTC-A also reports that it assigned personnel to work with the MOD to meet electronic payroll system milestones in 2015 and Despite these requirements, the ANA continues to rely largely on manual systems for ANA personnel and payroll data collection and reporting, and the electronic systems in place only partially function. In April 2014, CSTC-A officials stated that they plan to transfer the ANA payroll process to the Electronic Payroll System, which the Afghan National Police uses for its payroll processes. However, our January 2015 audit report on ANP personnel and payroll data noted significant weaknesses in this system, such as the inability of the Electronic Payroll System to interface with AFMIS and issues with the payroll system s linkage to AHRIMS. After we discussed those weaknesses with CSTC-A in October 2014, command officials informed us that they were in the process of replacing the Electronic Payroll System with a new payroll system that both the ANA and the Afghan National Police would use. 31 In February 2015, CSTC-A reported that the command was evaluating available systems to select the most suitable automated pay system for the MOD, with the ultimate aim of achieving an integrated personnel and pay system. Until that system is implemented, the MOD will continue to calculate ANA salaries manually, making the salaries vulnerable to inaccuracy and manipulation and providing the U.S. government with little assurance that they are correct. Weaknesses in AFMIS Call into Question the Accuracy of ANA Salary Payment Data We identified multiple weaknesses within AFMIS, the electronic system the MOF uses to track the Afghan government s expenditures. Specifically, AFMIS only contains aggregated ANA salary expenditures; it does not record individual salary payments. CSTC-A officials stated that the AFMIS system is not intended to capture or manage such individual payments, noting that the ANA conducts payroll payment tracking through the manual payroll system. According to its Afghan fiscal year 1393 commitment letter with the MOD, CSTC-A was required to audit AFMIS data every 2 weeks for transactions recorded using CSTC-A s funding code; the 1394 commitment letter calls for weekly reconciliations with AFMIS data. CSTC-A s direct contributions standard operating procedure states that reviews of AFMIS expenditure reports is one technique CSTC-A should use to audit direct assistance funding. However, because AFMIS data is aggregated, CSTC-A is only able to obtain summary-level data on ANA salary expenditures, limiting the command s ability to review individual salary payments. In addition, provincial MOF officials enter data into AFMIS manually, which increases the risk that errors will occur in the data entry process. Further, AFMIS data is ultimately based entirely on unit-level attendance data, which, as previously discussed, lacks necessary controls and oversight. These weaknesses coupled with CSTC- A s limited oversight of AFMIS data limit assurances that ANA salary payments are accurate. Some ANA Personnel Receive their Salaries via Trusted Agent Method of Salary Distribution CSTC-A s commitment letter for Afghan fiscal year 1394 December 21, 2014 through December 20, 2015 states that, beginning July 1, 2015, CSTC-A will only fund 80 percent of salary payments for ANA personnel receiving salaries in cash via an MOD-appointed trusted agent until they can be paid through an electronic 30 The CSTC-A officials we met with did not know why the Computerized Payroll System was eliminated. 31 SIGAR AR, Afghan National Police: Salary Payments Based on Partially Verified Data. SIGAR AR/Afghan National Army Personnel and Payroll Data Page 9

16 funds transfer method. We were unaware of the use of this method of salary payment within the ANA beyond limited cash salary payments during training, before recruits could receive electronic funds transfers, even after multiple meetings with CSTC-A, Essential Function 4, and ANA personnel. 32 CSTC-A estimated in February 2015 that 5 percent of ANA personnel are paid this way. When we asked CSTC-A officials for further details, they reported no knowledge of this type of payment, and Essential Function 4 did not respond to additional requests for information. As we reported in our January 2015 audit of Afghan National Police personnel and payroll data, the trusted agent process for salary payments lacks documentation and accountability, putting those funds at a higher risk of being subject to corruption. 33 Independent Efforts to Verify ANA Personnel and Payroll Data Confirmed Weaknesses in Existing Data Systems Our efforts to test the accuracy of ANA data confirmed the problems we identified with ANA data systems, specifically the inconsistent use of ANA-issued identification cards and incomplete personnel records in AHRIMS. During our visits to the 207th Corps headquarters in Herat province, the 209th Corps headquarters in Balkh province, and the AAF Air Wing in Kabul, we collected personnel names, ranks, and identification numbers, and requested that CSTC-A officials verify the data we obtained against personnel records in AHRIMS. 34, 35 Overall, we collected information on 134 personnel present-for-duty at the three units we visited using either their ANA-issued identification card or a bank card. At least 17 of the personnel we met did not have their ANA identification card. We were able to verify 103 (77 percent) of the 134 personnel we collected information on against personnel data from AHRIMS. Specifically: In Herat, we collected information for 39 individuals present at the time of our visit. The unit commander reported 17 personnel absent, meaning we could not physically verify at least 30 percent of the unit. 36 Of the 39 individuals present, 34 were able to present an ANA-issued identification card confirming their names and identification numbers. Five of the 39 individuals present did not have a personnel record in AHRIMS. In Balkh, we collected information for 35 individuals present at the time of our visit. 37 Of the 35, 23 were able to confirm their identities using an ANA identification card. Of the 23, 5 did not have a personnel record in AHRIMS. In Kabul, we collected information for 60 AAF personnel present at the time of our visit. 38 At least 3 of the 60 lacked any form of identification. In lieu of identification, AAF officials verbally confirmed the identities and identification numbers of these individuals, and provided a list of 9 additional 32 According to the CSTC-A officials we interviewed in April 2014, the trusted agent process was only used on a limited basis during recruit training, before ANA personnel had been assigned to a unit or location. 33 SIGAR AR, Afghan National Police: Salary Payments Based on Partially Verified Data. 34 We did not give the officials we met with prior notice of our intention to physically verify a unit under their command. 35 The documentation that unit officials in Herat and Balkh provided us did not clearly identify the total number of personnel assigned to the units. We requested this information from CSTC-A, but the command was unable to provide it. As a result, we could not determine the percentage of personnel that were physically present in each unit. 36 Of the 17 personnel absent at the time of our visit, ANA officials told us 5 personnel were serving elsewhere on temporary duty, 4 were on leave, 3 were in training, and the remaining 5 had gone to the bank to obtain their salaries. 37 Due to time constraints, we observed but were unable to collect data on an additional 16 unit personnel present-for-duty. 38 We asked to observe personnel from the 310 section of the AAF unit we visited in Kabul. In addition to the 310 section, AAF officials assembled personnel from the 300, 301, and 320 sections. Overall, we observed and obtained information on 60 individuals from the 310 section, six from the 300 section, one from the 301 section, and nine from the 320 section, as well as 11 whose section we could not identify because we could not match their names and identification numbers to any documentation the unit provided. For this analysis, we only discuss the 60 individuals with the 310 section. SIGAR AR/Afghan National Army Personnel and Payroll Data Page 10